Bank of the FSM v Ohwa Christian High School [2018] FMSC 28; 21 FSM R. 645 (Pon. 2018) (17 July 2018)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2016-003

BANK OF THE FEDERATED STATES OF )
MICRONESIA, )
)
Plaintiff, )
)
vs. )
)
OHWA CHRISTIAN HIGH SCHOOL d/b/a )
OHWA CHRISTIAN ACADEMY, )
)
Defendant. )
__________________________________________ )

ORDER DENYING DEFENDANT’S MOTION TO QUASH SUBPOENA AND SUBPOENA DUCES TECUM AND FOR PROTECTIVE ORDER

Dennis K. Yamase
Chief Justice

Decided: July 17, 2018

APPEARANCES:

For the Plaintiff: Stephen V. Finnen, Esq.
P.O. Box 1450
Kolonia, Pohnpei FM 96941

For the Defendant: Yoslyn G. Sigrah, Esq.
P.O. Box 3018
Kolonia, Pohnpei FM 96941

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HEADNOTES

Debtors’ and Creditors’ Rights Orders in Aid of Judgment
In hearings for an order in aid of judgment, the judgment debtor, having been subpoenaed as a witness by the judgment creditor, will testify about his or her finances, assets, income, and his ability to pay, and based on this evidence and other evidence the judgment creditor has introduced through other witness testimony or documentary exhibits, as well as any evidence similarly introduced by the judgment debtor, the trial judge will make findings about the fastest way in which the judgment debtor can reasonably satisfy the judgment and will fashion an order in aid of judgment accordingly. Bank of the FSM v. Ohwa Christian High Sch., 21 FSM R. 645, 648 (Pon. 2018).

Civil Procedure Discovery Protective Order; Debtors’ and Creditors’ Rights Orders in Aid of Judgment

When a plaintiff seeks an order in aid of judgment, the court must inquire into the defendant’s ability to pay, and when the information the plaintiff seeks pertains to the defendant’s income, finances, and could reasonably uncover assets not previously disclosed, the court will deny the defendant’s motion to quash the plaintiff’s subpoena and subpoena duces tecum. Bank of the FSM v. Ohwa Christian High Sch., 21 FSM R. 645, 648 (Pon. 2018).

Civil Procedure Discovery Protective Order; Civil Procedure Motions
A defendant, that seeks to quash a subpoena and a subpoena duces tecum, must meet its burden by clarifying and explaining its objections to those subpoenas. Bank of the FSM v. Ohwa Christian High Sch., 21 FSM R. 645, 648 (Pon. 2018).

Civil Procedure Discovery Protective Order
The court may quash or modify a subpoena if the subpoena is unreasonable and oppressive, but generally, a protective order will be granted only when the information sought is wholly irrelevant and could not have any possible bearing on the issue. Bank of the FSM v. Ohwa Christian High Sch., 21 FSM R. 645, 648 (Pon. 2018).

Civil Procedure Discovery Protective Order
Generally, a protective order will likely not be issued during discovery unless the information being sought is privileged or wholly irrelevant. Bank of the FSM v. Ohwa Christian High Sch., 21 FSM R. 645, 648 (Pon. 2018).

Civil Procedure Discovery Protective Order; Debtors’ and Creditors’ Rights Orders in Aid of Judgment
When a subpoena duces tecum seeks documents that are reasonable and unoppressive and can address the defendant’s ability to reasonably satisfy the judgment, the defendant has not provided good cause for the court to issue a protective order. Bank of the FSM v. Ohwa Christian High Sch., 21 FSM R. 645, 648 (Pon. 2018).

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COURT’S OPINION

DENNIS K. YAMASE, Chief Justice:

I. BACKGROUND

There remains pending motions from September 2016 in this matter. A procedural background is appropriate. On July 29, 2016, the Court entered a Stipulated Judgment against Defendant Ohwa Christian High School of UCCP dba Ohwa International Christian Academy (“Defendant Ohwa”). On September 7, 2016, Plaintiff Bank of the Federated States of Micronesia (“Plaintiff BFSM”) filed a Motion for Order in Aid of Judgment against Defendant Ohwa for which a hearing was scheduled to be held on January 19, 2017.

Days before the scheduled hearing, subpoena and subpoena duces tecum were issued. Minutes before the hearing began, Defendant Ohwa filed a motion to quash the subpoena and subpoena duces tecum and for a protective order. The hearing was continued to provide Plaintiff BFSM with an opportunity to respond to Ohwa’s motion and for review and ruling by the Court on the motion. Plaintiff BFSM filed its Opposition to Defendant Ohwa’s motion on February 2, 2017 to which Defendant Ohwa filed a Reply on March 6, 2017.

There was no further action in this matter until June 21, 2018 when Plaintiff BFSM requested for a hearing on its pending motion for an order in aid of judgment. On June 22, 2018, the Court scheduled a hearing on July 5, 2018. On June 25, 2018, subpoena and subpoena duces tecum were issued. On June 29, 2018, the hearing was rescheduled to July 18, 2018, when it came to the Court’s attention that Defendant Ohwa’s counsel will be off-island on that date. On July 5, 2018, subpoena and subpoena duces tecum were issued again. On July 9, 2018, Defendant Ohwa filed a Motion to Quash Subpoena and Subpoena Duces Tecum and for Protective Order. On July 11, 2018, Plaintiff BFSM filed its Opposition to Defendant Ohwa’s Motion to Quash and Protective Order.

II. DISCUSSION

The arguments raised in the previous motions were similarly asserted in the recent motions and therefore, the Court is familiar with the arguments for both sides. Plaintiff BFSM is seeking discovery of records for bank passbooks showing any bank accounts in Defendant Ohwa’s name; all documents reflecting monies received by Defendant Ohwa for years 2017 and 2018, by way of school fees or any other source; all documents showing anticipated income or receipts from any source in 2018 and/or 2019; and all documents reflecting how the money was spent from the two loans that are the subject of this lawsuit. The only apparent changes in the subpoenas are the years for which Plaintiff BFSM is seeking discovery of documents reflecting monies received by Defendant Ohwa by way of school fees or any other source and documents showing anticipated income or receipts from any source.

A. Motion to Quash Subpoena and Subpoena Duces Tecum

In the recent filing, Defendant Ohwa continued to argue that they are current with their payments. Defendant Ohwa asserted that they would provide copies of the loan payment history. Of date, none has been filed. Nonetheless, Defendant Ohwa maintained that their ongoing payment of $500 is evidence of Defendant Ohwa’s good faith and dutiful compliance to the agreement entered into by the parties. Defendant Ohwa also alluded to missed payments indicating that for those months Defendant Ohwa paid the following month. Defendant Ohwa further claimed that the documents being sought for by Plaintiff BFSM are irrelevant and confidential.

In response, Plaintiff BFSM argued that documents sought in the subpoena duces tecum directly addresses Defendant Ohwa’s ability to pay. Moreover, it is Plaintiff BFSM’s contention that Defendant Ohwa has failed to meet its burden to prove that the documents being sought for are irrelevant and confidential. According to Plaintiff BFSM, mere assertion is not enough to make the requisite showing.

This is a post-judgment request for discovery. FSM Civil Rule 69, in relevant part states,

Process to enforce a judgment for the payment of money shall be a writ of execution, unless the court directs otherwise. The procedure on execution, in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the court is held, existing at the time the remedy is sought, except that any statute of the Federated States of Micronesia governs to the extent that it is applicable. In aid of the judgment or execution, the judgment creditor or a successor in interest when that interest appears of record, may obtain discovery from any person, including the judgment debtor, in the manner provided in these rules or in the manner provided by the practice of the state in which the court is held.

Additionally, pursuant to 6 F.S.M.C. 1409,

At any time after a finding for the payment of money by one party to another and before any judgment based thereon has been satisfied in full, either party may apply to the Court for an order in aid of judgment. Thereupon the Court, after notice to the opposite party, shall hold a hearing on the question of the debtor's ability to pay and determine the fastest manner in which the debtor can reasonably pay a judgment based on the finding. In making this determination the Court shall allow the debtor to retain such property and such portion of his income as may be necessary to provide the reasonable living requirements of the debtor and his dependents, including fulfillment of any obligations he may have to any clan, lineage, or other similar group, in return for which obligations he, or his dependents, receive any necessary part of the food, goods, shelter, or services required for their living.

In providing guidance in hearings for order in aid of judgment, the appellate court commented that “the judgment debtor, having been subpoenaed as a witness by the judgment creditor, will testify about his or her finances, assets, income and his ability to pay. Based on this evidence and other evidence the judgment creditor has introduced through other witness testimony or documentary exhibits, as well as any evidence similarly introduced by the judgment debtor, the trial judge makes his findings about ‘the fastest way in which the judgment debtor can reasonably satisfy the judgment’ and fashions his order in aid of judgment accordingly.” George v. Sigrah, 19 FSM R. 210, 220 (App. 2013).

In the instant matter, Plaintiff BFSM is seeking for an order in aid of judgment. The Court must inquire into Defendant Ohwa’s ability to pay, and the information being sought pertain to Defendant Ohwa’s income, finances, and could reasonably uncover assets not previously disclosed. Additionally, if resisting discovery, Defendant Ohwa must meet its burden by clarifying and explaining its objections. Adams v. Island Homes Constr., Inc., [2002] FMSC 29; 11 FSM Intrm. 130, 132 (Pon. 2002). Defendant Ohwa did not do so; therefore, Defendant Ohwa’s motion to quash subpoena and subpoena duces tecum is denied.

B. Motion for Protective Order

Defendant Ohwa is also seeking a protective order against Plaintiff BFSM. Defendant Ohwa claimed that Plaintiff BFSM is seeking confidential documents from the school, and that Plaintiff BFSM did not show or has not shown that the documents sought for are relevant and material to Defendant Ohwa’s being current on its payment to the Bank. In opposition, Plaintiff BFSM argued that even though there was no agreement made to an order in aid of judgment it is irrelevant because any party may come back to court and seek a modification. Furthermore, Plaintiff BFSM contended that Defendant Ohwa has failed to meet a very high burden to prevail on its motion because Defendant Ohwa has to provide legal authority and affidavits to support its claims that the documents are confidential or privileged. According to Plaintiff BFSM, a general statement of privacy is insufficient.

Pursuant to FSM Civil Rule 45(b), the Court may “quash or modify a subpoena if it is unreasonable and oppressive.” Moreover, it has been established by this Court that generally when a protective order is granted it is only in the instance that the information sought is “wholly irrelevant and could not have any possible bearing on the issue. FSM Dev. Bank v. Carl, 20 FSM R. 329, 333 (Pon. 2016). Furthermore, it is a general rule that a protective order will not likely be issued during discovery unless the information being sought is privileged or wholly irrelevant. Id.

In the instant case, the documents being sought in the subpoena duces tecum are reasonable and unoppressive. The documents, as requested in the subpoena duces tecum, can address Defendant Ohwa’s ability to reasonably satisfy the judgment. Defendant has not provided good cause for the Court to issue a protective order, and Defendant Ohwa’s motion for protective order is therefore denied.

III. CONCLUSION

For the reasons above, NOW, THEREFORE, Plaintiff’s Motion to Quash Subpoena and Subpoena Duces Tecum and for Protective Order is HEREBY DENIED.

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